Record Profits for Taiwanese Shipping Company Despite Industry Suffering and Falling Freight Rates

Shipping rates skyrocketed during the pandemic. It sometimes cost over 20,000 dollars to send a container from Asia to the American west coast – against the usual around 1,200 dollars due to very high demand. Now the situation has reversed. High interest rates and inflation are causing consumers to tighten their grip.

Prices have fallen to normal levels, but many shipping companies entered into long-term agreements which have meant that they have profited very well until recently.

Record profit

The Taiwanese shipping company Yang Ming Marine is giving employees an average of 30 monthly salaries as a summer bonus in connection with the payout in June. This comes on top of the bonus of 12 months’ wages that was given earlier this year.

According to the Taiwanese business newspaper Economic Daily News, it is laid down in the company’s articles of association that a minimum of one percent of last year’s profit must go to employees in the form of a bonus. The bonus payment was recently approved by the shipping company’s general meeting.

With an average monthly salary of just over 50,000 Taiwan dollars (almost NOK 20,000), this will result in a bonus payment of almost NOK 600,000, according to Focus Taiwan.

The company’s shareholders also get to share in the record profits. Almost 40 percent of the profit is to be distributed among the shipping company’s shareholders.

The company’s share price increased more than 30-fold during the pandemic. The share price has fallen, but is ten times higher than it was three years ago. The container shipping boom is over. The company expects this year’s profit to fall by 99 per cent compared to last year.

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The shipping industry is suffering

Shipping giant Evergreen Marine Corp., whose 3,100 permanent employees have higher fixed salaries than competitor Yang Ming Marine, gave an average of 50 monthly salaries in annual bonuses at New Year. This came after the shipping company made a profit of 334 billion Taiwan dollars (120 billion kroner) last year.

Last week, employees were paid an average of 11–12 months’ wages as a summer bonus. According to Taiwan News, this will mean an average payout of around 613,000 Taiwan dollars (about NOK 220,000).

Evergreen has warned that this year’s profit will fall by 94 per cent.

– The shipping industry will suffer in the first half of the year, but will then start to pick up again. Any increase will only be possible in the second half of the year. The key to when this happens depends on when the war between Russia and Ukraine ends, Evergreen CEO Hsieh Huey-chuan said during the general meeting in May.

Collapse in freight rates

Several shipping lines have reported losses in their quarterly reports for the first three months of the year. The analysis company Xeneta describes the market situation as a “collapse” in its latest rapport and the biggest decline in May that the company has ever recorded on its Xenetas Shipping Index (XSI).

– If industry observers wondered how bad things could get for the shipping companies after the ten percent fall in April, the answer is now available. This is the biggest drop we’ve ever seen for the XSI index, which tracks global prices in real time. It paints a gloomy picture of the situation in the industry, says director Patrik Berglund of the Oslo company, which collects and analyzes freight rates, in the report.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links, which lead directly to our pages. Copying or other forms of use of all or part of the content may only take place with written permission or as permitted by law. For further terms see here.

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2023-06-06 02:03:36
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